After spending more than C$60 million (US$41 million) and threeyears of preliminary work, the sponsors of the upstream portion ofthe Millennium Pipeline Project have decided to put the regulatoryreview process in Canada on indefinite hold.

Canada’s National Energy Board is due to rule soon on therequest by sponsors of the Canadian Millennium Pipeline for anindefinite suspension of proceedings. Hearings were scheduled tostart Aug. 21 in London, ON.

“Considerable delays have been experienced” in the U.S. beforeFERC, the NEB was told by Canadian Millennium sponsors. The latestone follows a change in the eastern end of the project’s routethrough Westchester County in New York State to avoid safetyconcerns related to a major power transmission line and to avoidconflicts with wealthy landowners by using establishedtransportation corridors. The NEB has been told the switch involvesonly 23 miles or 5% of the 422-mile route to New York City, but ithas prompted FERC to request much additional information and holdmore consultations with intervenors in the case.

TransCanada acknowledges that the landowner tangle is only oneamong multiple issues that have tripped up Millennium, saying theproject’s target of approval in one year has already turned out tobe 18 months too optimistic. “The numerous delays have ranged fromother route deviation reviews, as well as awaiting U.S. stateagencies’ permits and certificates prior to issuing a FinalEnvironmental Impact Statement. The most notable regulatorydevelopments in the project have been the FERC’s decisions not toissue a Preliminary Determination, to hold a technical conferenceto hear submissions as to the strength and the timing of marketgrowth in the U.S. Northeast and to request the U.S. Army Corps ofEngineers’ review of the Lake Erie Crossing prior to issuing anFEIS.” The Corps’ review took until June 1, requiring only a slightincrease in the depth of an underwater pipeline trench thatMillennium says it can do with only a “negligible” effect on costs.

Unveiled in the spring of 1997 by a consortium includingTransCanada PipeLines Ltd., Westcoast Energy Inc., Columbia GasTransmission Co. and MCN Energy Inc., the US$700 million plan callsfor deliveries of 700 MMcf/d along a route stretching from the Dawntrading hub in southern Ontario across Lake Erie and New York Stateto Long Island, starting in late 2001. TransCanada holds thetransportation-service contract for all the space on the Canadianpart of the proposed route. In turn, Millennium says nineprospective shippers have booked 97% of the project’s capacity.

The Millennium partners say they still have “total commitment”to the international project. TransCanada says suspending theCanadian share in the regulatory review could create flexibilityfor accelerating the project as well as holding it up to match thepace in the U.S.

The Westcoast subsidiary participating in the partnership, St.Clair Pipelines Ltd., says “changes occasioned by these delays donot invalidate the project. Quite the contrary, recent marketdevelopments strongly corroborate the project need. The one-yearforward curve [in gas commodity-futures trading] for basisdifferentials [price differences] between Dawn and New York isapproximately US$.075 per MMBtu. This exceeds the cost oftransportation between Dawn and New York. This is a significantincrease in the historical basis differential and is but oneexample of the increasing market support and need for the project.”St. Clair also points to “a significant number” of gas-fired powerprojects emerging in New York as another positive sign.

In Canada, landowner, native, municipal and consumer intervenersin the Millennium case are asking the NEB to make the consortiumgive a guarantee now — just in case the project collapses —that their expenses will be paid before granting any postponements.Their requests appear likely to fall on sympathetic official ears.

In a lengthy letter to the Millennium group after it first askedfor the delay, a plainly annoyed NEB pointed out that the case is acomplicated Joint Panel Review that also involves the CanadianEnvironmental Assessment Agency. The energy board said, “throughoutthe process to date, significant resources and effort have beenexpended by all parties to accommodate the ever-changing timetableof the applicants.” Even though it took a mediation effort withintervenors to come up with the Aug. 21 date for starting publichearings, the project sponsors evidently did not discuss their newplans with the intervenors and “the panel is disappointed.” A panelmember’s appointment expires Dec. 31. A suspension of the Canadianreview “may impose an unfair burden on other parties to theprocess….. the panel is concerned that an adjournment may leadintervenors to incur costs for a project that may or may not cometo fruition.”

Gordon Jaremko, Calgary

©Copyright 2000 Intelligence Press, Inc. All rightsreserved. The preceding news report may not be republished orredistributed in whole or in part without prior written consent ofIntelligence Press, Inc.